New online role-playing game aims at 'World of Warcraft'

Most massively multiplayer online role-playing games are about conflict: fantastic clashes between warriors, wizards, aliens, orcs and elves.

And unlike most video games that have a plot and an ending, MMOs (massively multiplayer online games) are living, evolving virtual worlds that players can explore and influence. They're hugely popular — and lucrative.

The current behemoth, World of Warcraft, has 10 million-plus active members that spend $40 to $60 to buy the game, then pay a $15 monthly subscription fee. Most MMOs run on PCs or Macs with interactive features and new content delivered via an Internet connection.

Now there's a battle involving MMOs going on in the real world, as gamemakers attempt to challenge, or at least siphon off some of the success of, World of Warcraft. New strategies include design changes to make it easier to woo new players, as well as MMOs based on popular franchises such as Star Trek and Star Wars. At stake: a U.S. market expected to amount to about $800 million this year, compared with $700 million last year and $332 million in 2004, says market research firm DFC Intelligence.

The newest skirmisher is Warhammer Online: Age of Reckoning, published by Electronic Arts erts and created by Mythic Entertainment. Launched last week, the game shipped 1.5 million copies to retailers, a record for initial PC game shipments at industry giant EA.

Although the companies wouldn't provide sales specifics, "We are either the or one of the fastest-selling MMOs of all time," says Mythic co-founder Mark Jacobs.

A big investment

Warhammer is based on a Tolkien-esque fantasy universe similar to Dungeons and Dragons. Players can explore performing individual and group quests that give their character (such as a warrior, healer, priest or magician) increased power and skills.

Mythic, based in Fairfax, Va., began work on Warhammer in fall 2005; EA acquired Mythic in June 2006. The company's offices are covered in drawings of monsters, weapons and fantastical environments and decorated with hundreds of handcrafted items sent from fans.

During a recent visit, one of the several floors Mythic had grown to inhabit teemed with 150 customer service trainees. They were exploring the game universe and receiving instruction on handling call-in and online problems. More than 250 people have worked on Warhammer over the past three years.

Jacobs would not comment on the cost of developing the game. But Michael Pachter, analyst at Wedbush Morgan Securities, estimates that EA and Mythic may have invested $50 million.

With Warhammer, Mythic is changing the MMO rules by making the game easier for players who might not have enough time to commit to long sessions. (Many MMOs require hours devoted each week to advance your characters.) That might appeal to some longtime players — and attract newcomers, too.

"You can literally step into our game for 15 minutes and have a really interesting experience," says the game's executive producer, Jeff Hickman. "Or you could spend five hours playing our game."

Finding ways to attract new MMO players or keep current ones strengthens a proven business model. "If you have a game that's successful, it's a recurring revenue stream," Pachter says. "The success of World of Warcraft has emboldened competitors to put ever-increasing amounts into the development of their games because they now see the potential is well beyond a million subscribers, if you do it right."

Arsenault expects to see many more MMOs based on familiar properties. Games already in the works include DC Universe Online, which features Batman, Superman, Wonder Woman and The Flash; Star Trek Online, based on the popular television show; and Stargate Worlds, tied to the cable TV sci-fi franchise. BioWare, makers of the Knights of the Old Republic video game spinoff of the Star Wars movies, is working on a similar MMO, according to Arsenault.

Developers and publishers of these games and others will be watching Warhammer's campaign in this changing market. If Mythic and EA cannot succeed long term, others may be leery of entering the marketplace. "They are putting their stake in the ground," says DFC Intelligence analyst David Cole.

There's a lot to lose. Notable MMO flameouts include attempts at broadening the market, such as The Sims Online and The Matrix Online, each of which cost $20 million or so to develop. "Nothing has really come along to match World of Warcraft," Cole says. "It's a really great business model if you can make it work. The profits you can reap if you have a successful product is huge. But actually being able to do that, that's the killer."

Cole estimates that a "monster" MMO could achieve a 40% profit margin, or nearly half of the monthly fees. With subscribers of 500,000, that could reach $7.5 million.

"If you can get to 500,000 (subscribers), you can be very profitable," Pachter says. "At 1 million, the initial investment can be repaid quickly."

Mythic has a history in the MMO space. It launched Dark Age of Camelot in 2001, and the well-regarded MMO is still in business. Its size doesn't rival Warcraft (Camelot had 250,000 players at its peak), but "Over the years, millions have gone through the game," Jacobs says.

Warhammer need not vanquish World of Warcraft to succeed in its quest to offer another MMO alternative, Jacobs says. "We don't need to expand the market in order to succeed," he says. "So many more people now play these games than have ever played in the past."